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STOCKHOLDERS' AGREEMENT
dated as of October 29, 1997
among
BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P.,
BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P.,
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P.,
JUPITER CAPITAL CORPORATION,
RICHARD E. DAUCH,
MORTON E. HARRIS
and
AMERICAN AXLE & MANUFACTURING OF MICHIGAN, INC.
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS..................................................... 1
1.1 Defined Terms......................................... 1
1.2 Other Definitional Provisions; Interpretation......... 2
SECTION 2. TRANSFERS....................................................... 3
2.1 Limitations on Transfer............................... 3
2.2 Transfers to Affiliates............................... 3
2.3 Effect of Void Transfers.............................. 4
2.4 Legend on Securities.................................. 4
2.5 Tag-Along Rights...................................... 4
2.6 Drag-Along Rights..................................... 6
2.7 Piggy-Back Rights..................................... 7
2.8 Demand Registration................................... 8
2.9 Other Registration-Related Matters.................... 9
2.10 Participation Rights.................................. 12
SECTION 3. OTHER........................................................... 13
3.1 Additional Securities Subject to Agreement............ 13
3.2 Termination........................................... 13
3.3 Injunctive Relief..................................... 13
3.4 Other Stockholders' Agreements........................ 14
3.5 Amendments............................................ 14
3.6 Successors, Assigns and Transferees................... 14
3.7 Notices............................................... 14
3.8 Integration........................................... 15
3.9 Severability.......................................... 15
3.10 Counterparts.......................................... 16
3.11 Governing Law......................................... 16
3.12 Approval of Affiliate Transactions.................... 16
-i-
STOCKHOLDERS' AGREEMENT, dated as of October 29, 1997, among
Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited
partnership ("BCPII"), Blackstone Offshore Capital Partners II, a Cayman
Islands exempted limited partnership ("BOCPII") and Blackstone Family
Investment Partnership II L.P., a Delaware limited partnership (together with
BCPII and BOCPII, the "Blackstone Entities"), American Axle & Manufacturing of
Michigan, Inc., a Michigan corporation (the "Company"), Jupiter Capital
Corporation, an Ohio corporation ("Jupiter"), Morton E. Harris ("Harris") and
Mr. Richard E. Dauch ("Dauch" and together with Harris and Jupiter, the
"Rollover Holders").
W I T N E S S E T H :
WHEREAS, prior to the closing of the transactions
contemplated by the Recapitalization Agreement (defined below), AAM
Acquisition, Inc., a Delaware corporation, assigned its rights and obligations
under the Recapitalization Agreement to the Blackstone Entities; and
WHEREAS, the Blackstone Entities as of the date hereof are
the beneficial holders of a majority of the outstanding shares of Common Stock
(as defined below) of the Company; and
WHEREAS, the parties hereto wish to enter into certain
agreements with respect to the holdings by the Blackstone Entities and the
Rollover Holders;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, terms defined
in the heading and the recitals shall have their respective assigned meanings,
and the following capitalized terms shall have the meanings ascribed to them
below:
"Affiliate" shall mean, with respect to any Person, (i) any
Person that directly or indirectly controls, is controlled by or is
under common control with, such Person, (ii) any director, officer,
member, partner (including limited partners) or employee of such
Person or any Person specified in clause (i) above; provided, that
officers, directors or employees of the Company shall be deemed not
to be Affiliates of the Blackstone Entities for purposes hereof
solely by reason of being officers, directors or employees of the
Company or (iii) in the case of Jupiter, Dauch or
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Harris, any member of Ray Park's, Dauch's or Harris's family or any
entity established for estate planning purposes.
"Agreement" shall mean this Stockholders' Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"Business Day" shall mean a day other than a Saturday,
Sunday, federal, New York State or Michigan holiday or other day on
which commercial banks in New York City or Michigan are authorized or
required by law to close.
"Common Stock" shall mean the common stock, par value $.01
per share, of the Company.
"Other Agreements" shall mean any management stock
subscription or similar agreements providing for the purchase by
management of the Company's Common Stock.
"Person" shall mean any individual, corporation, limited
liability company, partnership, trust, joint stock company, business
trust, unincorporated association, joint venture, governmental
authority or other entity of any nature whatsoever.
"Public Offering" shall mean the sale of shares of Common
Stock to the public pursuant to an effective registration statement
(other than a registration statement on Form S-4 or S-8 or any
similar or successor form) filed under the Securities Act.
"Recapitalization Agreement" shall mean the Recapitalization
and Stock Purchase Agreement dated as of September 19, 1997, among
AAM Acquisition, Inc., American Axle & Manufacturing, Inc., the
Company, Harris, Jupiter and Dauch.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, as the
same may be amended from time to time.
"Stockholders" shall mean each of the Blackstone Entities,
Jupiter, Harris and Dauch and any of their permitted transferees
hereunder and "Stockholder" shall mean any one of the Stockholders.
"Transfer" shall mean any transfer, sale, assignment,
exchange, mortgage, pledge, hypothecation or other disposition of any
Common Stock or any interest therein.
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1.2 Other Definitional Provisions; Interpretation. (a) The
words "hereof", "herein", and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section and subsection references
are to this Agreement unless otherwise specified.
(b) The headings in this Agreement are included for
convenience of reference only and shall not limit or otherwise affect the
meaning or interpretation of this Agreement.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. TRANSFERS
2.1 Limitations on Transfer. (a) Each Stockholder hereby
agrees that, except for Transfers effected pursuant to an effective
registration statement filed under the Securities Act, no Transfer shall occur
unless the Company has been furnished with an opinion in form and substance
reasonably satisfactory to the Company of counsel reasonably satisfactory to
the Company that such Transfer is exempt from the provisions of Section 5
under the Securities Act and from the provisions of any other applicable
securities laws.
(b) Each Stockholder hereby agrees that, except for (i)
Transfers in connection with a Public Offering, (ii) Transfers pursuant to
Rule 144 under the Securities Act, (iii) Transfers to the Company in one or
more transactions approved by the Board of Directors of the Company and (iv)
Transfers pursuant to Sections 2.5 and 2.6, no Transfer shall occur unless the
transferee shall agree in a writing reasonably satisfactory in form and
substance to the Company to become a party to, and be bound to the same extent
as its transferor by the terms of, this Agreement.
(c) Notwithstanding anything contained herein to the
contrary, the Stockholders hereby agree that, except for (i) Transfers to
Affiliates, (ii) Transfers by the Blackstone Entities that trigger the right
of the other Stockholders to "tag along" with the Transfer of shares of Common
Stock by the Blackstone Entities pursuant to Section 2.5, (iii) Transfers by
the Blackstone Entities that trigger the right to "drag along" shares of the
other Stockholders pursuant to Section 2.6 and (iv) the sale of shares of
Common Stock pursuant to an effective registration statement filed under the
Securities Act pursuant to the registration rights set forth in Sections 2.7
and 2.8 of this Agreement, no Transfer shall occur until three years from the
date hereof. For purposes of this Section 2.1(c), both the Transfer by the
Blackstone Entities and the Transfer by the other Stockholders pursuant to
Sections 2.5 and 2.6 shall be exempt from the Transfer restrictions of this
Section 2.1(c).
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2.2 Transfers to Affiliates. Notwithstanding anything
contained herein to the contrary, but subject to Section 2.1(c), each of the
Stockholders shall be entitled from time to time, to transfer any or all of
the shares of Common Stock beneficially owned by it to any of its Affiliates
who agree to become a party to, and be bound to the same extent as its
transferor by the terms of, this Agreement. Any Transfer by the Blackstone
Entities or their Affiliates to any of their respective stockholders (or other
equity owners) of any or all of the shares of Common Stock beneficially owned
by them (including a distribution of such shares of Common Stock upon a
liquidation of any of the Blackstone Entities or any of their Affiliates or
otherwise) shall be deemed to be a Transfer to Affiliates of the Blackstone
Entities for purposes of this Section 2.2.
2.3 Effect of Void Transfers. In the event of any purported
Transfer of any shares of Common Stock in violation of the provisions of this
Agreement, such purported Transfer shall be void and of no effect and the
Company shall not give effect to such Transfer.
2.4 Legend on Securities. Each certificate representing
shares of Common Stock issued to any Stockholder shall bear the following
legend on the face thereof:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A STOCKHOLDERS' AGREEMENT AMONG BLACKSTONE CAPITAL
PARTNERS II MERCHANT BANKING FUND L.P., BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P., BLACKSTONE FAMILY INVESTMENT PARTNERS II L.P.,
JUPITER CAPITAL CORPORATION, MORTON E. HARRIS, RICHARD E. DAUCH, AND
AMERICAN AXLE & MANUFACTURING OF MICHIGAN, INC. (THE "COMPANY"), A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. NO
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS'
AGREEMENT AND (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) IF THE COMPANY
HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND
REGULATIONS THEREUNDER AND ANY OTHER APPLICABLE SECURITIES LAWS. THE
HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES
TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH STOCKHOLDERS'
AGREEMENT."
2.5 Tag-Along Rights. (a) So long as this Agreement
shall remain in effect and the Blackstone Entities and their
Affiliates beneficially own collectively an aggregate number of
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shares of Common Stock not less than one-third (1/3) of the aggregate number of
shares of Common Stock beneficially owned by the Blackstone Entities on the date
hereof (taking into consideration any stock dividends on, or subdivisions,
reclassifications, combinations or other similar adjustments to, the Common
Stock), with respect to any proposed Transfer (a "Proposed Transfer") by the
Blackstone Entities or any of their Affiliates (in such capacity, a
"Transferring Stockholder") of Common Stock permitted hereunder, other than (1)
as provided in Section 2.2 and (2) in a Public Offering, the Transferring
Stockholder shall have the obligation, and each of the Rollover Holders (but not
any of their non-Affiliate transferees or their Affiliate's transferees) shall
have the right, to require the proposed transferee (the "Proposed Transferee")
to purchase from such Rollover Holder (in such capacity, a "Tagging
Stockholder") a number of shares of Common Stock up to the product (rounded up
to the nearest whole number) of (i) the quotient determined by dividing (A) the
aggregate number of shares of Common Stock owned by such Tagging Stockholder by
(B) the aggregate number of shares of Common Stock beneficially owned by the
Blackstone Entities, the Tagging Stockholder and any other Persons who are
permitted to include shares of Common Stock in such sale pursuant to this
Agreement or any of the Other Agreements (including the other Rollover Holders),
and (ii) the total number of shares of Common Stock proposed to be directly or
indirectly transferred to the Proposed Transferee in the Proposed Transfer, and
at the same price per share of Common Stock and upon the same terms and
conditions (including without limitation time of payment and form of
consideration) as to be paid and given to the Transferring Stockholder;
provided, that in order to be entitled to exercise its right to sell shares of
Common Stock to the Proposed Transferee pursuant to this Section 2.5, the
Tagging Stockholder must agree to make to the Proposed Transferee the same
representations, warranties, covenants, indemnities and agreements as the
Transferring Stockholder agrees to make in connection with the Proposed Transfer
of the shares of Common Stock of the Transferring Stockholder; provided further,
that all representations and warranties shall be made by the Tagging
Stockholders and the Transferring Stockholder severally and not jointly and that
the liability of the Transferring Stockholder and the Tagging Stockholders
(whether pursuant to a representation, warranty, covenant, indemnification
provision or agreement) for liabilities in respect of the Company shall be
evidenced in writings executed by them and the Proposed Transferee and shall be
borne by each of them on a pro rata basis.
(b) The Transferring Stockholder shall give notice to the
other Stockholders of each Proposed Transfer giving rise to the rights of the
Tagging Stockholders set forth in the first sentence of Section 2.5(a) at
least 20 days prior to the proposed consummation date of such Transfer,
setting forth the aggregate number of shares of Common Stock proposed to be so
transferred, the name and address of the Proposed Transferee, the proposed
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amount and form of consideration and other terms and conditions of payment
offered by the Proposed Transferee, and a representation that the Proposed
Transferee has been informed of the tag-along rights provided for in this
Section 2.5 and has agreed to purchase shares of Common Stock in accordance
with the terms hereof. The tag-along rights provided by this Section 2.5 must
be exercised by the Tagging Stockholders within 10 Business Days following
receipt of the notice required by the preceding sentence, by delivery of a
written notice to the Transferring Stockholder indicating such Tagging
Stockholder's desire to exercise its rights and specifying the number of
shares of Common Stock it desires to sell. The Transferring Stockholder shall
be entitled under this Section 2.5 to transfer to the Proposed Transferee the
number of shares of Common Stock equal to the difference between (x) the
number referred to in clause (ii) of paragraph (a) above and (y) the sum of
(1) the aggregate number of shares of Common Stock set forth in the written
notice, if any, delivered by the Tagging Stockholders pursuant to the
preceding sentence; provided, however, that the number of shares of Common
Stock that a Tagging Stockholder may include in such notice and sell to the
Proposed Transferee is limited to the number of shares calculated pursuant to
the first sentence of Section 2.5(a) and (2) the aggregate number of shares of
Common Stock required to be purchased by the Proposed Transferee pursuant to
any other agreement. If the Proposed Transferee fails to purchase shares of
Common Stock from any Tagging Stockholders that has properly exercised its
tag-along rights under Section 2.5(a), then the Transferring Stockholder shall
not be permitted to make the Proposed Transfer, and any such attempted
Transfer shall be void and of no effect, as provided in Section 2.3 hereof.
(c) If a Tagging Stockholder exercises its rights under
Section 2.5(a), the closing of the purchase of the Common Stock with respect
to which such rights have been exercised shall take place concurrently with
the closing of the sale of the Transferring Stockholder's Common Stock.
2.6 Drag-Along Rights. (a) So long as this Agreement shall
remain in effect and the Blackstone Entities and their respective Affiliates
beneficially own collectively an aggregate number of shares of Common Stock
not less than one-third (1/3) of the aggregate number of shares of Common
Stock beneficially owned collectively by the Blackstone Entities on the date
hereof (taking into consideration any stock dividends on, or subdivisions,
reclassifications, combinations or other similar adjustments to, the Common
Stock), if any of the Blackstone Entities or their Affiliates receives an offer
from a Person or any of its Affiliates (a "Third Party") to purchase all, or
substantially all (pursuant to a recapitalization or other transaction), of the
outstanding shares of Common Stock owned by the Stockholders and such offer is
accepted by the Blackstone Entities or their Affiliates, then each Rollover
Holder (and its Affiliates and transferees) hereby agrees that it will transfer
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all shares of Common Stock owned by it (or substantially all the shares of
Common Stock held by it pursuant to the terms of the proposed transaction in
the same proportion as is being transferred/retained by the Blackstone
Entities) to such Third Party on the terms of the offer so accepted by the
Blackstone Entities, including the same per share consideration.
(b) The Blackstone Entities shall give notice (the
"Drag-Along Notice") to the Rollover Holders and their Affiliates that hold
Common Stock of any proposed Transfer giving rise to the drag-along rights set
forth in Section 2.6(a) as soon as practicable following the acceptance of the
offer referred to in Section 2.6(a). The Drag-Along Notice shall set forth the
number of shares of Common Stock proposed to be so transferred, the name of
the proposed transferee, the proposed amount and form of consideration and the
other terms and conditions of the offer.
2.7 Piggy-Back Rights. (a) Each time the Company is planning
to file a registration statement under the Securities Act (other than a
registration statement on Form S-4 or S-8) in connection with the proposed
offer and sale of Common Stock by the Company and/or a stockholder has
exercised its demand registration rights pursuant to this Agreement or any
Other Agreement (the "Initiating Party"), the Company will give prompt written
notice thereof to the Stockholders who are not the Initiating Party (the
"Non-Initiating Parties") of their rights under this Section 2.7, at least 30
days prior to the anticipated filing date of such registration statement;
provided, that no member of the Non-Initiating Parties shall have any rights
pursuant to this Section 2.7 with respect to the first Public Offering of
Common Stock, if the Company is the only Person including shares of Common
Stock in such registration statement. Notwithstanding the foregoing, the
parties acknowledge and agree that the Company will use its reasonable best
efforts to include the shares of Common Stock held by Jupiter and Harris in
the first Public Offering and will only exclude such shares if the
underwriters in good faith advise the Company, that in their opinion, the
inclusion of such shares of Common Stock in the first Public Offering of
Common Stock will have an adverse effect on the offering (including the price
at which the shares of Common Stock can be sold). Upon the written request of
any member of the Non-Initiating Parties made within 10 Business Days after
the receipt of any such notice from the Company, which request shall specify
the shares of Common Stock (the "Piggy-Back Shares") intended to be disposed
of by such Stockholder in such offering, the Company will use its reasonable
efforts to effect the registration under the Securities Act of all the
Piggy-Back Shares which the Company has been so requested to register by the
Stockholders, only to the extent required to permit the disposition of the
Piggy-Back Shares to be registered; provided, that (i) if, at any time after
giving written notice of its intention to register any Common Stock and prior
to the effective date of the registration statement filed in connection with
such registration, the Initiating Party shall determine for any reason
8
not to proceed with the proposed registration, the Company may at its election
give written notice of such determination to the holders of Piggy-Back Shares
and thereupon shall be relieved of its obligation to register any Piggy-Back
Shares in connection with such registration, and (ii) if such registration
involves an underwritten offering, each holder of Piggy-Back Shares requesting
to be included in the Company's registration must sell its shares to the
underwriters on the same terms and conditions as apply to the Blackstone
Entities and their respective Affiliates.
(b) If a registration pursuant to this Section 2.7 involves
an underwritten offering and the managing underwriter or underwriters in good
faith advise the Company, in writing that, in their opinion, the number of
shares of Common Stock which the Company and the holders of the Piggy-Back
Shares and any other Persons intend to include in such registration exceeds
the largest number of shares of Common Stock which can be sold in such
offering without having an adverse effect on such offering (including the
price at which the shares of Common Stock can be sold), then the Company will
include in such registration (i) first, the shares of Common Stock the Company
proposes to sell for its own account, if any, and (ii) second, to the extent
that the number of shares of Common Stock which the Company proposes to sell
is less than the number of shares of Common Stock which the Company has been
advised can be sold in such offering without having the adverse effect
referred to above, such amount of Piggy-Back Shares shall be allocated pro
rata among the Stockholders based upon their relative proportionate holdings
of Common Stock on the date such registration statement is filed.
2.8 Demand Registration. (a) Upon the written request from
time to time (a "Request") of any Blackstone Entity or any Affiliate of a
Blackstone Entity that holds Common Stock that the Company effect the
registration under the Securities Act of all or part of the shares of Common
Stock owned by such Blackstone Entity and Affiliates, the Company will as
expeditiously as practicable use its reasonable best efforts to effect the
registration under the Securities Act of such shares and cause such
registration statement to remain effective for a period of not less than 180
days; provided, however, that the Company shall not be required to effect more
than five registrations pursuant to this Section 2.8(a). The Blackstone
Entities shall have the right to select the managing underwriter or
underwriters to administer the offerings covered by its Requests.
(b) For so long as Dauch and his Affiliates beneficially own
not less than 40% of the aggregate number of shares of Common Stock
beneficially owned by Dauch on the date hereof (taking into consideration any
stock dividends on, or subdivisions, reclassifications, combinations or other
similar adjustments to, the Common Stock), upon the written request of Dauch,
at any time after 180 days following the first Public
9
Offering, that the Company effect the registration under the Securities Act of
all or part of the shares of Common Stock owned by Dauch and his Affiliates,
the Company will as expeditiously as practicable effect the registration under
the Securities Act of such shares and cause such registration statement to
remain effective for a period of not less than 180 days; provided, however,
that the Company shall not be required to effect more than one registration
pursuant to this Section 2.8(b); provided, further, if the Company is
requested to effect such a demand by Dauch and the Blackstone Entities
reasonably determine in good faith it would be detrimental to the Company and
its securityholders for such registration statement to be filed on or before
the date such filing would otherwise be required hereunder, the filing shall
be deferred for a period of not more than 180 days after receipt of the
request for such registration from Dauch.
(c) For so long as Jupiter and Harris and their Affiliates
together beneficially own not less than 40% of the aggregate number of shares
of Common Stock beneficially owned by Jupiter and Harris on the date hereof
(taking into consideration any stock dividends on, or subdivisions,
reclassifications, combinations or other similar adjustments to, the Common
Stock), upon the written request of a majority in interest of Jupiter and
Harris, at any time after 180 days following the first Public Offering, that
the Company effect the registration under the Securities Act of all or part of
the shares of Common Stock owned by Jupiter and Harris and their Affiliates,
the Company will as expeditiously as practicable effect the registration under
the Securities Act of such shares and cause such registration statement to
remain effective for a period of not less than 180 days; provided, however,
that the Company shall not be required to effect more than one registration
pursuant to this Section 2.8(c); provided, further, if the Company is
requested to effect such a demand by Jupiter and Harris and the Blackstone
Entities reasonably determine in good faith it would be detrimental to the
Company and its securityholders for such registration statement to be filed on
or before the date such filing would otherwise be required hereunder, the
filing shall be deferred for a period of not more than 180 days after receipt
of the request for such registration from Jupiter and Harris.
2.9 Other Registration-Related Matters.
(a) Each Stockholder agrees that it shall not effect any
sales of Common Stock or securities convertible into Common Stock during the
14 days prior to and up to a 180 day period beginning on the effective date of
a registration statement in which any Stockholder is participating in
connection with an underwritten offering of Common Stock (whether pursuant to
Section 2.7 or 2.8 or otherwise, except as part of such registration), or in
the case of the Company's first Public Offering, if and to the extent
requested in writing (with reasonable prior notice) by the managing
underwriter of the
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underwritten public offering. Notwithstanding the foregoing, the parties
acknowledge and agree that Jupiter and Harris will not be subject to the
foregoing restriction unless the underwriters in good faith advise the
Company, that in their opinion, the failure to restrict the Transfer of such
shares will have an adverse effect on the offering (including the price at
which the shares of Common Stock can be sold).
(b) The Company agrees not to effect any sales of Common
Stock or securities convertible into or exercisable or exchangeable for Common
Stock during the 14 days prior to and the 180 day period beginning on the
effective date of any registration statement in which any Stockholder is
participating in connection with an underwritten Public Offering of Common
Stock, if and to the extent reasonably requested in writing (with reasonable
prior written notice) by the managing underwriter of the underwritten Public
Offering.
(c) The Company may require any Person that is selling
shares of Common Stock in a Public Offering pursuant to Section 2.7 or 2.8 to
furnish to the Company in writing such information regarding such Person and
such other information reasonably requested by the Company in order to comply
with the Securities Act.
(d) The Company will pay all reasonable out-of-pocket costs
and expenses (including the reasonable fees and expenses of counsel for the
Stockholders to be selected by the Stockholders who own a majority of the
shares of Common Stock included in the proposed registration) incurred in
connection with the registration of Common Stock pursuant to Sections 2.7 and
2.8 (except as otherwise expressly provided therein).
(e) Before filing a registration statement or prospectus, or
any amendments or supplements thereto, in connection with any registration or
proposed registration of Common Stock pursuant to Section 2.7 or 2.8, the
Company will furnish to each of the Stockholders copies of all documents
proposed to be filed.
(f) The Company will furnish to each seller of Common Stock
such number of copies of the applicable registration statement and of each
amendment or supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus), in conformity
with the requirements of the Securities Act, and such other documents as such
seller may reasonably request in order to facilitate the disposition of Common
Stock by such seller.
(g) The Company will use its reasonable best efforts to
register or qualify Common Stock covered by a registration statement under
such other securities or blue sky laws of such jurisdictions as each seller
shall reasonably request, and do any
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and all other acts and things which may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such jurisdictions of
the Common Stock owned by such seller, except that the Company shall not for
any such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
paragraph (g), it would not be obligated to be so qualified, to subject itself
to taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction.
(h) The Company will use its reasonable best efforts to
cause the Common Stock covered by a registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller thereof to consummate the disposition thereof.
(i) The Company will notify each seller of Common Stock
covered by a registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period of the Company's becoming aware that the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and at the request of any such
seller, prepare and furnish to such seller a reasonable number of copies of an
amended or supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Common Stock, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.
(j) The Company will enter into such customary agreements
(including an underwriting agreement in customary form) and take such other
actions as sellers of a majority of such Common Stock or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Common Stock.
(k) The Company will make available for inspection by any
seller of Common Stock covered by a registration statement, by any underwriter
participating in any disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
seller or any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement.
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(l) The Company will obtain a "cold comfort" letter or
letters from the Company's independent public accountants in customary form
and covering matters of the type customarily covered by "cold comfort" letters
as the sellers of a majority of the outstanding shares of Common Stock covered
by the registration statement shall reasonably request.
(m) Each Stockholder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
paragraph (i) such Stockholder will forthwith discontinue disposition of
Common Stock pursuant to the registration statement covering such Common Stock
until such Stockholder's receipt of the copies of the amended or supplemented
prospectus contemplated by paragraph (i) and, if so directed by the Company,
such Stockholder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Stockholder's
possession, of the prospectus covering such Common Stock current at the time
of receipt of such notice. In the event the Company shall give any such
notice, the period for which the Company shall be required to keep the
registration statement effective shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to paragraph (i) and including the date when each seller of Common
Stock covered by such registration statement shall have received the copies of
the supplemented or amended prospectus.
(n) If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or a registration statement pursuant to
the requirements of the Securities Act, the Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder (or,
if the Company is not required to file such reports, it will, upon the request
of a majority in interest of the Stockholders, make publicly available such
information), and it will take such further action as any Stockholder may
reasonably request, all to the extent required from time to time to enable
such Stockholder to sell shares of Common Stock without registration under the
Securities Act within the limitations of the exemptions provided by (i) Rule
144 under the Securities Act, as such Rule may be amended from time to time,
or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of any Stockholder, the Company will deliver to such Stockholder a
written statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this paragraph (n) to the contrary, the
Company may deregister under Section 12 of the Exchange Act if it then is
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder.
(o) The Company agrees that if the first Public Offering is
not consummated within three years from the date of
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this Agreement, that it will, in good faith, use its reasonable best efforts
to provide Jupiter and Harris liquidity for all of the shares of Common Stock
held by Jupiter and Harris on such date.
2.10 Participation Rights. (a) So long as this Agreement
shall remain in effect, the Company shall not issue additional shares of
Common Stock to any of the Blackstone Entities or any of their Affiliates (an
"Issuance") unless, prior to such Issuance, the Company notifies the other
Stockholders in writing of the proposed Issuance and grants to each other
Stockholder the right (the "Right") to subscribe for and purchase such
additional shares of Common Stock so issued at the same price and upon the
same terms and conditions as issued in the Issuance such that immediately
after giving effect to the Issuance and exercise of the Right, the shares of
Common Stock owned by each of the Stockholders and its Affiliates (rounded to
the nearest whole share) shall represent the same percentage of the aggregate
number of shares of Common Stock outstanding on a fully diluted basis as was
owned by each of the Stockholders and its Affiliates immediately prior to the
Issuance.
(b) The Right may be exercised by the Stockholders at any
time by written notice to the Company within 10 Business Days after the date
on which the Stockholders receive notice from the Company of the proposed
Issuance, and the closing of the purchase and sale pursuant to the exercise of
the Right shall occur at least 30 days after the Company receives notice of
the exercise of the Right and prior to or concurrently with the closing of the
Issuance. Notwithstanding the foregoing, the Right shall not apply to (i) any
issuance of Common Stock to all holders of Common Stock on a pro rata basis or
(ii) any issuance of Common Stock pursuant to a Public Offering.
SECTION 3. OTHER
3.1 Additional Securities Subject to Agreement. Each
Stockholder agrees that any other shares of Common Stock which they shall
hereafter acquire by means of a stock split, stock dividend, distribution or
otherwise (other than pursuant to a Public Offering) shall be subject to the
provisions of this Agreement to the same extent as if held on the date hereof.
If any of the Stockholders is issued any warrants, rights, calls, options or
other securities exchangeable or exercisable for or convertible into Common
Stock, the Stockholders agree to amend this Agreement to the extent necessary to
reflect such issuance in a manner consistent with the terms and conditions
hereof.
3.2 Termination. This Agreement shall terminate, and thereby
become null and void, in full on the earliest date on which the Blackstone
Entities and their respective Affiliates do not collectively own 20% or more
of the Common Stock then outstanding on a fully diluted basis; provided, that
the provisions of Sections 2.7, 2.8 and 2.9 shall survive until such
14
time as none of the Blackstone Entities and their respective Affiliates own
any shares of Common Stock.
3.3 Injunctive Relief. The Stockholders acknowledge and
agree that a violation of any of the terms of this Agreement will cause
irreparable injury for which adequate remedy at law is not available.
Accordingly, it is agreed that each Stockholder shall be entitled to an
injunction, restraining order or other equitable relief to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United States or
any state thereof, in addition to any other remedy to which they may be entitled
at law or equity.
3.4 Other Stockholders' Agreements. Except for the Other
Agreements, none of the Stockholders shall enter into any stockholder
agreement or other arrangement of any kind with any Person with respect to
shares of the Common Stock, and none of the Stockholders has previously
entered into such an agreement that remains in full force and effect as of the
date hereof, which is inconsistent with the provisions of this Agreement or
which may impair its ability to comply with this Agreement.
3.5 Amendments. This Agreement may be amended only by a
written instrument signed by the Blackstone Entities so long as it (or its
Affiliates) owns Common Stock and by Jupiter, Harris and Dauch so long as they
own (or their Affiliates own) Common Stock, and provided further that any
amendment which adversely affects the Company or imposes an additional
obligation on the Company must be approved in writing by the Company.
3.6 Successors, Assigns and Transferees. The provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and transferees permitted
hereunder (except for transferees that are transferred Common Stock pursuant to
a Public Offering or pursuant to Section 2.5), each of which shall agree in a
writing reasonably satisfactory in form and substance to the Company to become a
party hereto and be bound to the same extent hereby as the transferor that has
transferred the Common Stock to such transferees; provided, that if a
Stockholder transfers a portion of its or his Common Stock to a transferee which
is entitled to rights of the transferor hereunder, then such transferee(s) of
such transferor shall exercise such rights as a single group with that
transferor and its Affiliates.
3.7 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including
by telecopy), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered by hand, or two days after
being delivered to a recognized courier (whose stated terms of delivery are
three days or less to the destination of such notice) or, in the case of
telecopy notice, when received, addressed as follows to the
15
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
When Jupiter Capital Corporation is the intended recipient:
Jupiter Capital Corporation
c/o Ray Park
Park Corporation
6200 Riverside Drive
Cleveland, OH 44135
Telecopy: 216-265-2559
with a copy to:
When Richard E. Dauch is the intended recipient:
Richard E. Dauch
c/o American Axle & Manufacturing, Inc.
1840 Holbrook Avenue
Detroit, Michigan 48212-3488
Attention: Richard E. Dauch
Telecopy: 313-974-3204
with a copy to:
When Morton E. Harris is the intended recipient:
to the address provided in the stock transfer
books of the Company
When the Company is the intended recipient:
American Axle & Manufacturing
of Michigan, Inc.
1840 Holbrook Avenue
Detroit, Michigan 48212-3488
Attention: Patrick Lancaster
Telecopy: 313-974-3204
16
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert L. Friedman
Telecopy: 212-455-2502
When the Blackstone Entities are the intended recipient:
Blackstone Capital Partners II
Merchant Banking Fund L.P.
Blackstone Offshore Capital Partners
II L.P.
Blackstone Family Investment
Partnership II L.P.
c/o Blackstone Management Associates
II L.P.
345 Park Avenue--31st Floor
New York, New York 10154
Attention: David A. Stockman
Telecopy: (914) 241-3786
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert L. Friedman
Telecopy: 212-455-2502
3.8 Integration. This Agreement and the Recapitalization
Agreement, and the documents referred to herein or therein, or delivered
pursuant hereto or thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof. There are no
agreements, representations, warranties, covenants or undertakings with
respect to the subject matter hereof and thereof other than those expressly
set forth herein and therein. This Agreement supersedes all other prior
agreements and understandings between the parties with respect to such subject
matter.
3.9 Severability. If one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired,
it being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
17
3.10 Counterparts. This Agreement may be executed in two or
more counterparts, and by different parties on separate counterparts each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument.
3.11 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to the conflicts of law principles thereof. The parties
executing this Agreement hereby agree to submit to the non-exclusive
jurisdiction of the federal and state courts located in the State of New York
in any action or proceeding arising out of or relating to this Agreement.
3.12 Approval of Affiliate Transactions. Until such time as
the Rollover Holders own less than 10% of the shares of Common Stock then
outstanding on a fully diluted basis, the Company shall not agree to, engage
in or otherwise complete any Affiliate Transaction that would require written
approval of the banks under the Credit Agreement, dated as of October 27, 1997
among the Company and the several lenders from time to time thereto, other
than a transaction determined in advance of such transaction by the Board of
Directors of the Company as being upon terms no less favorable to the Company
than terms obtainable from a third party on an arms-length basis. For purposes
of this Section 3.13, "Affiliate Transaction" means any transaction or series
of related transactions (including, but not limited to, the purchase, sale,
lease or exchange of any property or the rendering of any service pursuant to
any management or consulting arrangement or otherwise, but excluding (v) the
payment of management or monitoring fees (which initially shall be the greater
of (i) $2.0 million and (ii) 1% of EBITDA per annum (subject to adjustment in
the event of acquisitions by the Company) to any Blackstone Entity or an
Affiliate of a Blackstone Entity, (w) the reimbursement of out-of-pocket
expenses of directors for services rendered in such capacity, (x) the payment
of customary directors' fees, (y) the payment of customary investment banking
fees to any Blackstone Entity or an Affiliate of a Blackstone Entity in
consideration of services rendered and (z) transactions expressly contemplated
by the Recapitalization Agreement and the exhibits thereto) between the
Company or any of its subsidiaries, on the one hand, and any Affiliate of the
Company (other than the Company or any of its subsidiaries), on the other
hand, or by the Company or any of its subsidiaries for the benefit of any
Affiliate of the Company (other than the Company or any of its subsidiaries).
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IN WITNESS WHEREOF, each of the undersigned has executed
this Agreement or caused this Agreement to be executed on its behalf as of the
date first written above.
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
BLACKSTONE OFFSHORE CAPITAL PARTNERS
II L.P.
BLACKSTONE FAMILY INVESTMENT
PARTNERS II L.P.
By: Blackstone Management Associates
II L.L.C., general partner
By: /s/ David A. Stockman
-----------------------------------
Name: David A. Stockman
Title: General Partner
JUPITER CAPITAL CORPORATION
By: /s/ Raymond Park
------------------------------------
Name: Raymond Park
Title: President
/s/ Richard E. Dauch
---------------------------------------
RICHARD E. DAUCH
/s/ Morton E. Harris
---------------------------------------
MORTON E. HARRIS
AMERICAN AXLE & MANUFACTURING OF
MICHIGAN, INC.
By: /s/ Richard E. Dauch
-----------------------------------
Name: Richard E. Dauch
Title: President